STARBUCKS

Overview

Established In 1971 At Seattle, Washington Famous For Its Quality Fresh-roasted Coffee Beans And Stylish Atmosphere. Over 9,000 Stores Worldwide Product Lines Include : Beverages (Coffee, Tazo Tea, Soda, Juices) Pastries Whole Coffee Beans Coffee-related Hardware And Equipment Merchandise (Mug, Cds)

Timeline
1971 Starbucks Coffee, Tea, And Spice Store (Coffee Bean

Roasting) Opened In Seattles Pike Place Market.

1982 Howard Schultz Joined Starbucks. 1986 Howard Schultz Established Il Giornale Coffee

Company.
1987 Il Giornale Acquired Starbucks And Changed The

Name Into Starbucks Corporation.

1992 Starbucks Decertified The Union And Made Ipo. 1995 Starbucks Coffee International Opens In Japan

Starbucks Implemented ESOP.

Timeline (Contd).

1996 Starbucks Began Selling Bottled Frappuccino. 1999 Starbucks Acquired Tazo Tea. 2000 Acquired Hear Music, A San Francisco-based Company 2003 Starbucks Acquired Seattles Best Coffee 2005 Introduced Starbucks Coffee Liqueur; Acquires Ethos Wate

Starbucks Coffee History

Seattle,1971 The History Of Starbucks Starts In1971.Three Friends, Jerry Baldwin, Zed Siegel And Gordon Bower, Who All Had A Passion For Fresh Coffee, Opened A Small Shop Called Starbucks, Coffee,tea And Spice In Pike Market In Seattle, Washington And Began Selling Fresh-roasted Accessories. The Stores Name Was Derived From A Moby Dick Character ,Starbucks. The First Store Do Not Sell Beverages. They Sold Retail Coffee Beans. 1972 A Second Starbucks Store Is Opened In Seattle.

Early 1980
Zev Siegel Leaves The Company. Jerry Baldwin Takes Over Management Of The Company And Functions As CEO. Gordon Bowker, Remains Involved As A Co-owner But Other Projects Take Up Most Of His Time, Including The Launch Of His New Microbrewery, The Redhook Ale Brewery.

Sept 1982 Enters Howard Schultz

Baldwin Hired Schultz As The New Head Of Marketing And Shortly Thereafter Sent Him To Milan To Attend An International House Wares Show In Italy. When He Arrived, Schultz Found Himself Infactuated With Exciting Coffee Culture Of Italy. Schultz Went To Verona And Had His First Caf Latte. He Observed People Enjoyed Themselves With Elegant Surrounding. Which Proved To Be Inspiration Moment For Schultz.

Early 1984

Starbucks Acquires The Five Stores In San Francisco's Peet's Coffee And Tea Chain. During This Period, Schultz Makes Several Attempts To Convince The Original Owners To Start Selling Coffee Beverages But They Prefer To Keep The Focus On Retail Coffee Products.
April 1984

Starbucks Opens Its Fifth Store, The First One In Downtown Seattle. Schultz Finally Convinces The Owners To Test An Espresso Bar, Making This Starbucks The First To Sell Coffee Beverages. It Becomes A Huge Success.
Late 1984

The Starbucks Founders Are Still Resistant To Installing Espresso Bars Into Other Starbuck Situation And Schultz Becomes Increasingly Frustrated. He Has Visited The Espresso Bars Of Milan, Italy And Has A Vision Of Bringing Italian-style Espresso Bars To America.

Slow Down! We Just Sell Beans.

However, Schultz's Idea Did Not Go Down Well With Baldwin. Baldwin Was Not Ready To Get Into The Restaurant Business Nor To Have Anything Distract Him From His Original Plan Of Selling Whole Beans. But He Did Let Schultz Test A Small Espresso Bar In The Corner Of One Of The Stores.
Late 1985:

Schultz Leaves Starbucks And Starts The Il Giornale Coffee Company.

Jan. 1986:

Schultz Raises Enough Seed Money To Open Several Il Giornale Coffee Houses. Starbucks Founders Baldwin And Bowker Support His New Endeavor And Invest Money In The New Company.
April 1986:

The First Il Giornale Store Opens

Il Giornale And Starbucks Go Their Separate Ways

When Starbucks Coffee Opened Its Sixth Store In Downtown Seattle, The Coffee Shop Was A Hit. It Was An Immediate Success. Schultz, However, Branched Out On His Own And Opened A Coffee House Named After Italy's Largest Newspaper, The Daily, Or Il Giornale. Two Months Later, The New Store Was Serving More Than 700 Customers A Day, And It Was Selling 300 Percent More Than The Starbucks Locations.

Sell Out: This Is My Company Now. In 1987 The Owners Of Starbucks Coffee Company Decided To Sell Their Coffee Business, Along With The Name, To A Group Of Local Investors For $3.7 Million. Schultz Raised The Money By Convincing Investors Of His Vision That They Could Open 125 Outlets In The Next Five Years. He Also Changed The Il Giornale Bare-breasted Mermaid Logo Into A More Socially Acceptable Figure. The Company Name Changed From Il Giornale To Starbucks, And Finally He Converted The Six Existing Starbucks Roasting Shops Into Elegant, Comfortable Coffee Houses.

Mission Statements
Company Mission Statement:
Establish Starbucks As The Premier Purveyor Of The Finest Coffee In The World While Maintaining Our Uncompromising Principles While We Grow.

Environmental Mission Statement:

Starbucks Is Committed To A Role Of Environmental Leadership In All Facets Of Our Business.

Values And Principles

Building A Company With Soul Opposing Franchising Because Of Quality Control And Culture

Only Selling Coffee Beans Without Artificial Flavors.

Satisfy Customers By All Means. Employees Contribution And Involvement In Making Starbucks A Better Company

Starbucks becomes a Public Company

Turned Into A Public Company In June,1992. Starbucks Initial Public Offering (Ipo) Was One Of The Most Successful Ipos Of The Year. Then, It Accelerated The Expansion Of Its Store Network.

Starbucks Strategy

Rapid store expansion strategy o Domestic store expansion o International store expansion o Employee Training and Recognition o Real Estate, Store Design, Planning, and Construction o Store ambience o Building a top management team o Bonding with customers o Mail order sales Product Line Coffee purchasing strategy

Starbucks Strategy (Contd).

1.)Rapid Store Expansion Strategy
Domestic Store Expansion - A Three-year Expansion Strategy - Starbucks Everywhere Approach International Store Expansion -Company-owned And Company-operated Stores Or Licensing - Created A New Subsidiary, Starbucks Coffee International - Expanded Its Consumer Products Channel In South Pacific Region

Starbucks Strategy (Contd).

Employee Training And Recognition
Systems To Recruit, Hire And Train Baristas And Store Managers Screening Training Programs Awards For Partners

Real Estate, Store Design, Planning, And Construction

A Broad Range Of Store Formats (The Right Image And

Character) A Stores Of The Future Project Team High-traffic, High-visibility Store Locations Control Of Average Store Opening Costs Wi-fi Availability At Stores -In-house Team Of Architects And Designers Was Created.

Starbucks Strategy (Contd).

Store Ambience
o Creation Of A Consistent, Inviting, Stimulating Environment That Evoked The Romance Of Coffee. o The Concept Of Everything Matters o Assessment Of Standards

Bonding With Customers

About 5 Million Customers Per Week Were Patronizing Starbucks Stores In Early 1998 o Starbucks Introduced The Starbucks Loyalty Card o It Created Its Own World Culture By Innovating New Proprietary Language For Its Products, To The Extent Of Publishing A Booklet For Such Vocabulary For Its Clients. o Starbucks Interior Store Design Was Carefully Studied And Aimed At Reaching The Human Inner-soul.
o

Starbucks Strategy (Contd).

2.)Product Line
o o o o o

Wide Range Of Products Choices Special Product Promotion

Selling Music Cds

Starbucks Cards Partnership With Bank One

Starbucks Strategy (Contd).

3.)Coffee Purchasing Strategy
Building Relationship With Growers And Exporters, Checking On Agricultural Conditions And Crop Yields, And Searching Out Varieties And Sources That Would Meet Starbucks Standards. Using Fixed-price Purchase Commitment And Purchasing Coffee Future Contracts Contributing To The Sustainability Of Coffee Growers And Helping Environment Conservation Purchasing And Marketing Fair Trade Certified Coffee Promoting Coffee Cultivation Methods That Protected Biodiversity And Maintained A Healthy Environment

SWOT Analysis

Market Entry Strategies Joint Venture

Pepsico And Starbucks Entered Into A Joint Venture Arrangement.

In October 1995 Starbucks Partnered With Dreyers Grand Ice Cream To Supply Coffee Extract For A New Line Of Coffee Ice Cream
Advantage Insider Access To Market Share Cost And Risk Leverage Partners Skill Base Technology Disadvantage Lack Of Control Over Technology Inability To Engage In Global Strategic Coordination Inability To Realize Location And Experience Economic.

o o o

o o o

Licensed Stores and Specialty Sales

The Company Had An Agreement With Marriot Host International In 1995, Starbucks Entered Into Negotiations With United Airlines To Have Starbucks Coffee Served On All United Flights In Addition, Starbucks Made Arrangements To Supply An Exclusive Coffee Blend To Nordstorms Most Recently, Starbucks Began Selling Its Coffees In Chapters, A Toronto Book Retailer With Sites Throughout Canada

Corporate Social Responsibility

Howard Schultz's Effort To "Build A Company With Soul" Starbucks Focuses Its Efforts On Improving Social And Economic Conditions For Coffee Farmers; Minimizing Environmental Impact; Making A Positive Contribution In The Communities Where They Do Business; And Providing A Great Work Environment For Their Partners (Employees). Establish The Starbucks Foundation In 1997 A Major Contributor Of CARE, Worldwide Relief And Development Organization (Health, Education, And Humanitarian Aid) Provides Financial Support To Community Literacy Organizations Participate In Local Charitable Projects. 2004 Envirostars Recognized Leader Award For Its Community Service And Environmental Activities

Increasing Competition

Though Starbucks Is Still A Dominating Chain But Its Hold On Coffee Has Loosened. Facing Competition Not From Newcomers But From Older Coffee Chains That Have Increasing Customer Loyalty. Another Threat Are The Established Food Chains That Have Altered Their Focus To Incorporate The Rising Trend Of Coffee

Increasing Competition

Dunkin Donuts: Complementary Pairing Of Coffee & Donuts. Peets Coffee & Tea: Focus On Quality Coffee & Strategic Positioning Of Stores Nearby To Starbucks Locations. Caribou Coffee: Differentiate Themselves On The Basis Of Store Environment.

Building the Starbucks Brand

(A) Advertising And Promotion:
Market There Brand More Aggressively In Order To Convince People That Starbucks Serves Coffee That Is Superior To Other Coffee And Beverages.

(B) Product Differentiation:

Starbucks Should Work On Differentiating Its Coffee. They Should Invest In Extensive Research And Development Efforts To Develop New Flavors, Blends Or Even Roast Fusions.

(C) Coffee Variety And Quality Control:

In Catering To Different Consumer Preferences, Starbucks Needs To Increase Its Variety Of Coffee Offered. Starbucks Needs To Ensure That The Coffee Offered Is Of The Highest Quality.

Brand Positioning

The Future

Purchase 100 Percent Of Coffee Through Ethical Sourcing Practices. Pro-actively Affect Climate Change By Offering Farmers Incentives To Prevent Deforestation Beginning With Pilot Programs In Sumatra, Indonesia & Chiapas, Mexico. Recyclable Cup Developed And Launched By 2012. 25 Percent Of Cups Will Be Reusable. 50 Percent Energy Used In Stores Will Come From Renewable Sources By 2010. Reduce Greenhouse Gas Emissions By Making Stores 25 Percent More Energy Efficient By 2010 (Per Co. Owned Store). Significant Reduction In Water Usage. All New Stores Will Be Certified Green By 2010.

Champion Tropical Rain Forest Protection As A Solution To Climate Change Community Involvement
Engage 50,000 Social Entrepreneurs To Innovate And Take Action And In Turn Inspire 100,000 Individuals To Take Action In Their Communities.