Howard Schultz and the Starbucks Company Essay

1519 Words7 Pages
1.0 CASE SUMMARY
Starbucks is a specialty coffee company located in Seattle, USA. The company CEO is Howard Schultz, who bought the company in 1987 for $3.8 million. Before purchasing Starbucks, Schultz was an employee there before deciding to leave the company to open his own coffee bar, Il Giornale in 1985.
After purchasing Starbucks, Schultz continued to expand the business rapidly by attracting more investors to gain financing. The company relied on positive word of mouth to attract customers to try its specialty coffee while emphasizing on the social experience of customers in its stores. This move has led to customers associating Starbucks with quality coffee and social experience in its outlets through immense public support and
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This strategy helps in reducing cost of the expansion plan as Starbucks only areas where the company has the least presence and number of outlets while only incurring maintenance cost of current outlets.
2. This strategy can assist Starbucks in identifying and avoiding markets where competitors are already established and have gain the maximum market share with the low probability for the company to succeed.
Negative
1. Starbucks may not be able to gain maximum brand exposure and awareness in markets outside the North American market that will affect its presence as a leading specialty coffee brand due to smaller scope of expansion which leads to lesser word-of-mouth marketing.
2. This strategy will not be able to help the company gain maximum market share of the young and growing specialty coffee industry as Starbucks will be selective in the market that it is entering.

4.2 Allow Franchising of Starbucks Outside North America
Positive
1. This will help mitigate the cost of establishing outlets outside the main market of North America which will help reducing the overall cost of Starbucks.
2. This strategy can help Starbucks to gain additional revenue and income stream through the fees gain from franchisees as a result of letting them operate their business under the Starbucks brand.
Negative
1. This will affect the centralized control aspired by

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