STARBUCKS CASE ANALYSIS QUESTIONS
Please answer all the following questions as they relate to the case. Please utilize as much outside resources as you deem necessary to reinforce your answers—especially the last question. Remember that this case is over 10 years old and Starbucks has changed since then.
1. In the early 1980’s, how did Howard Schultz view the possibilities for the fledgling specialty coffee market? What were the most important factors in shaping his perspective and its success?
2. By 1987, Schultz bought Starbucks from its original founders. It has grown from six stores to over 3300 locations. What were the critical drivers of Starbucks success?
3. Why did Schultz think he successfully import the Italian coffee bar
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The ambiances at each bar were different and the energy was electrifying. It was in this setting that he realized that creating an atmosphere and bonding with customers around a cup of coffee was monumental in improving his business. Coffee would be only the automobile for a place where people want to stay for a while, a place-like-home, and office. These variables will become the differentiating factor for Starbucks.
Howard Schultz viewed the possibilities for the specialty coffee market as one that will not be based on advertising and promotion, but rather one that is based on personal experiences, their reaction to coffee, both the people who make and serve it , and the stores atmosphere as well as a sense of community.
The larger known coffee businesses were beginning to show signs of stagnation in the 1970’s and 1980’s. Unlike Proctor & Gamble other large manufacturers, specialty coffee producers were small independent distributors. According to the Harvard Business School report on Howard Schultz; During the early 1980’s the average American consumed less than two cups of coffee per day, with almost one of every two men , women and children over the age of 10 does not drink coffee at all. The large coffee business started to compete for market share in a shrinking market. The smaller independent specialty coffee producers were selling only high quality Arabica beans. Arabica beans have less caffeine, less
Howard Schultz took a small three-store coffee shop and grew it into the largest specialty coffee retailer in the world. With twenty-five thousand locations, 105 million customers a week, and 191 thousand employees. Let’s start with the beginning.
3. When Schultz returned to Starbucks as CEO in 2008, how had the competitive context changed since his first tenure running the firm? What had caused or facilitated the changes?
The specialty coffee sector had expanded rapidly from 1970’s to the 1980 with annual sales rising from $45 million to $750 million (Bouclier, p.39)
In general the coffeehouse industry in the United States was experiencing an increase in coffee consumption per capita due to the “Starbucks effect”. At this time Starbucks was operating approximately 20,000 stores in the United States and was living a fast expansion strategy worldwide.
Schultz joined the company 1982 when Starbucks was still only a small, but highly respected roaster and retailer of whole bean and ground coffee. A business trip to Italy opened Schultz’s eyes to the rich tradition and popularity of the espresso bar. Espresso drink became the foundation of
Howard Schultz, owner of the Starbucks Corporation, is well known in the coffee industry today as an innovating contemporary leader. Schultz began his career with the Starbucks Corporation working in the operations department for 5 years. He purchased the company in 1987, and assumed responsibility as CEO, chairman, and later as a chief global strategist. Under Shultz’s leadership, Starbucks grew from 17 coffee shops to 4,000 stores rapidly and then he led the unrivaled Corporation into international markets around the world. The Starbucks Corporation has experienced tremendous growth and success in the US and internationally, (Lemus, Feigenblatt, Orta, & Rivero, 2015), and currently has 24,000
When Starbucks started their target market were people who enjoyed coffee not just for an energy boost from the caffeine, but people who enjoyed sitting down and drinking a well-prepared cup. Upon visiting Italy and falling in love with the coffee bars and the experience that they offered, Schultz envisioned a place between your home and work where you could sit and enjoy your coffee. Starbucks wanted to control their coffee from “raw green beans to the steaming cup” this meant that they had to talk with their farmers to make sure the quality was up to their standards. They were getting coffee from different places around the world that had different characteristics that would attract the type of coffee drinkers they wanted and tasted good. When preparing the coffee they first would ground the roasted beans, this was one of the ways that they attracted people to drink their coffee because it was freshly grounded before brewing. They used manual coffee pots to brew their coffee, which is more time-consuming but showed how dedicated they were with the quality of their product unlike other big companies. Starbucks was priced as a premium cup of coffee compared to other coffee shops, because of the steps they took to make a high-quality cup of Joe from start to finish. They put a lot of time and effort making sure that the atmosphere of
Starbucks is renowned for its morality due to their innovative sustainability and environmental policies and operations. They strive to go beyond mandated regulations by implementing ethics as part of their core practices. However, no matter how flawless their code of ethics is; they, too, face ethical issues and commit unethical acts. First, they are responsible for putting small, local coffee shops out of business which creates a uniform retail culture throughout cities. Second, they advertise to provide 100% fair trade coffee when it is not truly 100% fairly traded. Third, they use hormone added milk that is detrimental to the human body as well as the environment. Fourth, they set unrealistic, unattainable recycling goals, so they were unachievable; in turn, their trustworthiness is hindered and their reputation is tarnished. Lastly, it was revealed that Starbucks discovered ways to avoid paying taxes in the UK. To this day, Starbucks continues to be recognized as an ethical company. Although sometimes controversial, they are innovatively striving to positively change the ways of society and business operations.
Most know Starbucks, the ubiquitous retail chain that, in the 1990’s, turned coffee drinking into a national pastime. However few know Howard Schultz, the humble chairman, CEO and mastermind behind Starbucks’. Schultz is credited with bringing Italy’s “coffeehouse culture” to the United States and packaging it for mass consumption. This maverick marketer transformed a little-known four-chain store in the leading retailer of specialty coffee in North America.
Seeing a Starbucks sign reminds a person of the tantalizing flavors that are brewed from the store that sells millions of people their first cup of coffee every morning. Upon walking into the store, it is inviting and welcoming. The staff is friendly and helpful and the crowd is eager to enjoy that bittersweet java on the taste buds. When an order is made, the staff prepares each individual cup of coffee fresh, and exactly to the customer’s preference. Starbucks Corporation is the leading retailer, roaster and brand of specialty coffee in the world. Starbucks Chairman Howard Schultz has built a booming empire, with 13,500
The company’s founder and CEO, Howard Schultz, has been successful in creating Starbucks into something that we didn’t really know we needed until we had it. He has meticulously crafted a brand for the company that adds a psychological value to its offerings. Thereby, when you buy a cup of coffee at Starbucks, you buy an experience. The somewhat quiet, not-so-rushed atmosphere along with dimmed ambience and friendly
Howard Schultz stated that he always wanted to do something to make a difference for the society therefore he started to do that. The values that I admire from Schultz was his belief in employee satisfaction driving them to create customer’s satisfied and pleasant about their coffee, having his employees satisfied by having communication and training in the workplace, making high quality beverages quickly and make it how the customer would like it to be e.g. with one sugar, skim milk or caramel sauce
Starbucks was founded in 1971 and opened their first location in Seattle’s Pike Place Market (“Company Information,” 2015). Although the company’s website did not give any information on the founders, further research provided the names of three young businessmen. Jerry Baldwin, Zev Siegl and Gordon Bowker opened the store where they only sold coffee beans and coffee making machines (“History of Starbucks,” 2014). In 1981, Howard Schultz became the director of operations. Howard was fascinated by the coffee industry, and a year later took a trip to Italy to gain further insight on the operations of coffee shops. When Howard returned he had acquired new ideas and wanted to serve drinks, not just make the beans. When he could not convince the owners to agree with his ideas, he set out on his own in 1985 and founded Il Giornale. Just two short years later in 1987, Howard Schultz acquired Starbucks with the help of local investors and took over the business (“Starbucks Company Timeline,” 2014). From there, Howard expanded the company and made it into what it is today. The biggest factor overall that has contributed to the company’s growth was when Howard Schultz first started working for the company. From the beginning, he wanted to make the company into so much more than what it was. A specific way that Howard contributed to the growth was when he traveled to Italy. This experience gave him insight on the operations of coffee
Starbucks is an American coffee company which is widely known as the representative of coffee and other beverage distributors globally. Alongside many other coffee companies all around the world, Starbucks has been able to distinguish itself from others by application of many customer friendly factors such as quality, taste and as well as good customer experience. These factors have successfully been able to raise it recognition in many parts of the world as well as popularizing darkly roasted coffee.
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. Joseph Michelli (2007) echoes this sentiment, “A great cup of coffee is only part of the Starbucks success equation” (p. 767).