Starbucks Business Analysis

Starbucks Business Analysis

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Summary of organization’s historical development

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).
Howard Schultz’s first experience was similar as most customer that walk into a Starbucks store. When he first walked into a Starbucks Coffee Company Store in 1981 he fell in love. Schultz did not fall in love with carefully chosen coffee beans that make the coffee, similar to new Starbucks customers.

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He fell in love with the culture, individualism, and opportunity of the Starbucks Coffee Company Store, which only consisted of a three-store chain. Schultz was convinced that he wanted to be a part of a great company in the great city of Seattle and approached the owners about becoming Starbucks director of marketing.
After one year at Starbucks, Schultz was traveling in Milan, Italy when he realized coffee bars provided a location for socializing and relaxing (Griffin & Moorhead, 2007, pg.54). He believed that this was a culture that could soon fulfill a social aspect that restaurants and shopping malls fail to address in the United States (Griffin & Moorhead, 2007, pg.54). When Schultz returned home he presented the owners with the idea to enter the highly competitive restaurant business. The owners refused Schultz’s idea, which led him to seek new opportunities in the coffee bar business. Schultz went on to found a successful coffee bar business and, eighteen months later used the profits to buy Starbucks (Griffin & Moorhead, 2007,).
Organizational Objectives
Starbuck’s rapid growth has been a success without franchising and using word-of-mouth advertising, which allows them to keep a quality product in every store. Starbucks is all about purchases and roasts high-quality whole bean coffees and sells them along with fresh, rich-brewed, Italian style espresso beverages, a variety of pastries and confections, and coffee-related accessories and equipment primarily through its company-operated retail stores. In addition to sales through their company operated retail stores, Starbucks sells whole bean coffees through a specialty sales group and supermarkets. Furthermore, Starbucks produces and sells bottled Frappuccino coffee drink and a line of premium ice creams through its joint venture partnerships and offers a line of innovative premium teas produced by its wholly owned secondary, Tazo Tea Company. The Company’s objective is to establish Starbucks as the most recognized and respected brand in the world (Starbucks Comapy Profile).
In realizing and achieving this goal, the Company plans to continue to rapidly expand its retail operations, grow its specialty sales and other operations, and selectively pursue opportunities to leverage the Starbucks brand through the introduction of new products and the development of new distribution channels (Starbucks Comapy Profile).
Impact on business and trade
Yesterday Starbucks was a single store in Seattle, Washington and today it is a moved into a global market with over 11,300 stores with more than 3,300 of them in 37 foreign countries (Starbucks Comapy Profile). Starbucks first adventure outside the United States resided in Japan in 1996. By 2001, Starbucks introduced a stock option plan for all Japanese employees, making it the first company in Japan to do so (Starbucks Comapy Profile). Since the opening of our first store on August 2, 1996, in the Ginza district of Tokyo, Starbucks network has expanded rapidly throughout the country and has reached 722 stores as of the end of September 2007. Starbucks Japan was operated in return for initial licensing fees and royalties, which were later converted to joint ventures and wholly owned subsidiaries. After Japan, Starbucks moved on to Thailand and then into Europe’s mainland where they continued to build foreign direct investment (FDI) with a potential 15,000 international stores (Griffin & Moorhead, 2007, pg. 228). Starbucks FDI expansions transformed into a global brand with operations of 1,796 company operated and 2,792 joint venture or licensed stores overseas (Starbucks Comapy Profile).

Recommendations for the organization’s future

Typically Starbucks opens around 6 A.M. and close the doors around 11 P.M, which encounter their busiest times during the morning/afternoon rush. After work happy hours at establishments that sell alcohol busiest times during the work week range from 5 P.M. to 9 P.M. (Ohio). The future of Starbucks could be an organization that customers can come early for a cappuccino and muffin, drop in for an evening of signature alcohol beverages, such as an espresso martini or Irish coffee. Starbucks diversification could also have an advantage of having a worldwide imported beer or wine selection to offer returning customers for a drink after work crowd. The future Starbucks could offer a comfortable lounge for customers that are enjoying signatures cocktails and have a Coffee side that serves gourmet coffee drinks.
However there are many licensing, training, and worker obstacles that Starbucks will half to overcome, it will allow this organization to tap into a new market that continues to grow rapidly. The distilled spirits market crew for the eighth straight, with the 2007 sales up 5.6%, totaling $18.2 billion, as consumer interest in cocktails and high end products remained high (MC Marketing Charts). Wineries and liquor stores and agencies sold $5 billion worth of wines in 2006/2007, up 9.5% from 2005/2006. Beer stores and agencies sold $8.4 billion worth of beer in 2006/2007, up 2.0% from the previous year (The Stats Daily). By entering into a new high profitable market with a backing of a successful organization will be a tremendous asset to Starbucks.
Concluding remarks or observations

Since 1971, Starbucks started out as a coffee shop chain in Seattle, Washington and grew into an organization that dominates the global market of coffee in 37 years. During its growth they have represent their employees, diversification, and social and environment with the greatest of all respect, which is proven by the numerous awards received by the Starbucks Coffee Company from all over the world. Howard Schultz turned a small coffee shop in Seattle into the most recognized coffee cups in the world by walking into a store and visioning the future. Howard Schultz is want most people would dream to do in the small business world. He took a regular cup of coffee and made billions of dollars from a few small changes. Howard Schultz put a fancy logo on a recycled cup; he changed the name of the sizes, and sold it for five dollars.
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