Howard Schultz's Case

What was Howard Schultz's original strategic vision for Starbucks? Is his 2010 strategic vision for Starbucks different from the one he had in the 1980s? How many times has his strategic vision changed? Is his present strategic vision likely to undergo further evolution?

The Original Vision (mid-1980s)

 Began to materialize in 1983 when Schultz went to a housewares show in Milan, Italy--his first exposure to Italian-style espresso bars.

 Based on his experience in Italy, Schultz concluded that just selling coffee beans and coffee-making equipment was incomplete--he saw the value of modifying the store-format to include fresh-made coffee drinks using only high-quality dark-roasted beans.

* Schultz's Il Giornale venture was modeled after the Italian espresso bar format--complete with baristas espressos, cappuccino, lattés, Italian opera music, and so on.

* His original vision, upon acquiring Starbucks, was to create a nationwide chain of modified Italian-style coffee bars that also sold beans and coffee-making equipment. Freshly-brewed coffee drinks were to be the primary revenue producer; beans and coffee-making accessories were seen as secondary revenue producers. But he envisioned that a Starbucks store would be a gathering place for people--a kind of "third place" (after home and work).

 Company-owned stores only/no franchising.

 Build a company with values and principles that employees could be proud of.

* Include employees in decision-making

* Be open and honest with employees

* "Build a company with soul"

* Pursue the perfect cup of coffee

The Mission Statement (1990) and Subsequent Revisions in

 First created and formally adopted in 1990--see case Exhibit 8.

Vision Revisions/Adjustments/Modifications (1991-2005)

 Create a variety of store designs and formats, including two mini-store formats (1995-1996)

 Sell food items (pre-prepared, not cooked in-house)

 Build the Starbucks brand, and drive revenue growth, largely by developing new distribution channels for Starbucks products

* Joint venture with Pepsi--Frappuccino

* Partner with Dreyer's Grand Ice Cream--coffee ice cream flavors under the Starbucks brand.

* Enter into licensing agreements for store locations in areas where Starbucks does not have the ability to put/operate its own company stores.

* Begin to expand internationally by entering into license agreements with a reputable and capable local company to develop and operate new Starbucks stores in new country markets.

* Provide Starbucks coffee products to business offices, restaurants, hotels, universities, country clubs, business offices, and select retailers.

* Start selling packaged Starbucks coffees in supermarkets via an agreement with Kraft.

* Expand the in-store product line.

 Add Internet capability and digital entertainment in stores

 The reloadable Starbucks card

 Begin the process to globalize Starbucks (2003-2005)

The Drive to Make Starbucks a Global Enterprise (2000-2008)

■ Add both company-owned and franchised Starbucks in increasing numbers of locations outside the U.S. (see case Exhibit 5).

Transforming the Starbucks Experience and Rejuvenating Profitable Growth (2008-2010)

■ Schultz returns as CEO and launches his transformation agenda.

■ Refresh the mission statement and rephrase the underlying guiding principles (the last section of case Exhibit 8).

■ The seven elements