In 1981, Howard Schultz, vice president and general manager of U.S. operations for a Swedish maker of coffee and kitchen equipment, visited Starbucks and was immediately enamored by the business philosophy and opportunity. For over a year Schultz pressed for a position at Starbucks and was finally hired in September 1982. However, Schultz’s vision to expand and reconstruct Starbucks conflicted with the owner’s desire to retain a retail focus. So, in 1986, Schultz struck out on his own and founded Il Giornale Coffee Company. The following year, Schultz acquired Starbucks for $3.8 million dollars when the owners decided to focus their attention on running Peet’s Coffee and Tea, which they had acquired in 1984.
Starbucks was bought out by current CEO Howard Schultz in 1987. Since then, Andrew Harrer (2012) reports the company has grown to operate over “17,244 stores worldwide” (para. 1). Fortune (n.d.) reports in its yearly 100 Best Companies to Work for that Starbucks employs “some 95,000 employees”. From only a handful of stores in 1987 to a billion dollar franchise today, the success of Starbucks is due in great deal to their corporate culture, specifically how employees, or as Starbucks calls them, partners are treated.
Starbucks strategically positions each store with hopes of matching the specific location, helping to create a unique atmosphere. Throughout this paper, I will analyze Starbucks’ current domestic and international marketing strategy through SWOT (strengths, weaknesses, opportunities and threats) analysis, to provide new ideas, leading to market segmentation. Starbucks is a global corporation that sells authentic coffee in 30 countries, reporting revenues of nearly $5.1 billion in 2006 (Starbucks Marketing Plan). The main goal of Starbucks is to embrace diversity by applying the highest standards of excellence. On average, Americans drink 3 cups of coffee per day, though it is hard to make an accurate guess because every customer has their own personal rate.
Critical Thinking – Starbucks Case Study "Whatever your culture, your values, your guiding principles, you have to take steps to inculcate them in the organization early in its life so that they can guide every decision, every hire, every strategic objective you set” (Schultz & Yang, 2007). That’s exactly what Howard Schultz, CEO of Starbucks, did when he first started with the company in 1982 (“Our Heritage,” 2011). The company’s solid business model of providing more than just a cup of coffee allowed it to flourish for over two decades. Then in 2008, Starbucks’ stock had plummeted and the company’s aggressive growth strategy led to the commoditization of this popular coffeehouse and its products. When Schultz saw this company become a diluted version of what he dreamed it would be, he decided to step up again as CEO (Koehn et al., 2008).
Robbins and Coulter (2012) point out, “A good value chain involves a sequence of participants working together as a team, each adding some component of value” (p. 520). Starbucks continually reviews every aspect of their business; from the organizational culture to values and ethics to strategy, planning and operations, management control and finally human resources and performance management, searching for those items that don’t contribute to the “Starbucks experience” which is what makes the Starbucks Corporation a successful business model. Organizational Culture The Starbucks Corporation is built around an experience, the Starbucks experience. While the Starbucks experience is most notably associated with the way customers are treated, one could argue however, that the Starbucks experience transcends just the way customers are treated. The Starbucks experience is an all encompassing culture that revolves not just around customers but also to employees, or “partners” and suppliers.
In 2002, Starbucks had 5689 outlets in 28 countries. By early 2006, Starbucks had more 11,000 stores around the world. Starbucks had turned coffee from a commodity into an experience to savor. (Business Management Updates and Resources [online]) Starbucks has been struggling amidst a faltering economy, its own rapid growth (international expansion and growing presence in 43 countries) and increased competition from cheaper rivals. Starbucks wants to turnaround its business by providing customers with the distinctive Starbucks Experience and building on Starbucks legacy of innovation.
Starbucks is a corporation that offers specialty coffees, coffee beans, cold blended beverages, pastries, coffee related products and machines, and tea. Starbucks opened its first location in 1971 in Seattle. By the year 2000, Starbucks had over 3300 locations, and it is still growing. SWOT STRENGTHS: · 2000 marked 5th consecutive year of sales increase. · Low long-term debt to equity ratio of 0.01, company has good financial standing.
I've chosen the Starbucks Corporation on which to do my case assignment for the session. I first became interested in Starbucks while working on a paper for a previous marketing class. I became intrigued at the entrepreneurial spirit that such a large corporation had managed to maintain throughout its massive expansion. Starbucks corporation, unlike many of its now-defunct rivals, has done an outstanding job since its meager beginnings in 1970 with the execution of its strategic process; resulting in it currently owning 40% of the specialty coffee market and boosting annual sales exceeding $7 billion according to Burt Helm. Historic successes and recent turmoil within the company, including a near 40% decline in 2007 in profits (Sullivan 1), has once again piqued my interest in this American company.
From his first cup of Sumatra, Howard was drawn into Starbucks and joined a year later 2014).” Forty-two years later you can still go into this chain and get a pleasant ye expensive cup of coffee, but I believe in you get what you paid for. “Toda, with more than 18,000 stores in 62 countries, Starbucks is the premier roaster and retailer of specialty coffee in the world (2014).” Starbucks mission is to inspire and nurture the human spirit – one person, one cup, and one neighborhood at a time and with this, my job description is the popular barista. According to our course material job design is how we come up with job descriptions and departments (Reilly, Minnick, & Baack,... ... middle of paper ... ...yees adapt to change and employee roles. “An adaptation of the Matrix organization is to design the company by product and by country (Reilly, Minnick, & Baack, 2011).” This is important especially when Starbucks is geographically known and it should be able to conform to its surroundings and peoples likes by location. These changes would be successful because it would improve customer experience and define communication.
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.