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Howard Schultz and Starbucks Coffee Company
Prologue: International Expansion
On August 2, 1996, Starbucks Coffee Company opened its first store outside North America. Like many of its U.S. and Canadian outlets, the new store was located in a busy district of a prominent city—Tokyo. Starbucks managers had devoted much time to selecting the site, designing the store’s layout and fixtures, training its staff, and publicizing its introduction. A series of events, including receptions and public samplings, attracted consumer interest in the new store’s specialty coffee drinks, whole (unground) coffee beans, and pastries. For example, a
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Howard Schultz and Starbucks Coffee Company

learn more about the brand and its offerings. Most people standing in line intended to buy a caffe latte, cappuccino, or other specialty coffee drink that they associated with the young company.
Schultz was impressed by the customers’ enthusiasm. The Starbucks brand, he realized, “had the same power in Tokyo that it had in New York and Seattle. It had taken on a life of its own.”4
Schultz had bought the company in 1987, when it was still a small Seattle retailer, mainly selling coffee beans. In the ensuing nine years, it had become the nation’s largest purveyor of specialty coffee, selling the beverage served in various ways, along with coffee beans and related food and merchandise. Between 1992 and 1996, annual revenues had increased more than 650%, climbing to almost $700 million (Exhibit 5).5
Most of this increase had been driven by the swift proliferation of company-owned stores, with the rest of it coming from two thriving divisions—mail order, and specialty sales, which sold coffee to restaurants and other institutional purchasers. In 1987, Starbucks had 11 outlets; nine years later, over
900. In fiscal 1996 alone, the company opened 330 outlets, an average of almost one a day.6 As the business moved into new U.S. and Canadian urban markets, consumer awareness of specialty coffee and the Starbucks brand widened considerably. By the mid-1990s, millions of
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