Starbucks Case Analysis

Starbucks Case Analysis

"Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow."

Starbucks began with Jerry Baldwin, Zev Siegel, and Gordon Bowker in Seattle, Washington in 1971. At that time they called it Starbucks Coffee, Tea, and Spice. Their respective love for coffee and tea from around the world inspired them to venture out of their respective disciplines. With the success of a similar establishment in the San Francisco Bay Area, Bowker, Baldwin and Siegel figured they could also build such success in Seattle. With their individual investment of $1,350 and $5000 in loans, Starbucks began. Much credit goes to Alfred Peet a Dutch Immigrant who opened Peet's Coffee and Tea in Berkeley, California in 1966. Having visited Peet's store numerous times, Bowker Siegel and Baldwin learned the art of dark roasting coffee the European way to bring out its full flavor. Starbucks started out as a coffee bean and tea retailer. By the early 1980s, Starbucks had four stores in the Seattle area and Zev Siegel left the partnership after suffering burnout. Jerry Baldwin took over day-to-day management and Gordon Bowker stayed as an owner with other outside interests. All that changed in 1981 when Howard Schultz entered the picture. Schultz visited Starbucks out of curiosity due to the fact that they were selling so many of his company's products. Schultz worked as a vice president and general manager for a Swedish company based in the United States that made stylish kitchen equipment and coffeemakers. Schultz was so impressed with Starbucks, that by the time he returned to New York, he had decided to become a Starbucks. In 1982, Schultz became the head of marketing and oversaw the retail stores. Schultz came with many innovating ideas for Starbucks that was rejected by Baldwin and Bowker, but he never gave up. Between 1987 and 2003, Starbucks went from seventeen stores to seven thousand two hundred and twenty-five stores one thousand six hundred of which are in foreign countries.

Starbucks Corporation is a very profitable organization, earning in excess of $600 million in 2004. The company generated revenue of more than, $500 million in the same year. In 2004 Starbucks generated $5.2 million in sales and $392 million in net income. At the end of the fiscal year of 2005 which ended on October 2, 2005, Starbucks generated 6.2 Billion; an increase of 20% from 2004 same period. Their net revenue for the same period increased 23% over 2004. Starbucks had a goal of 1500 stores in 2006 but with the way things are going they are aiming for 1600 instead. As of today, Starbucks has 10000 Cafйs worldwide including the United States which houses a third of the company. In 2005, Starbucks was rated Fortune Top 100 Companies to work for as a respected employer that values its workforce. With strong ethical beliefs and ethical mission statement that reads, "Starbucks is committed to a role of environment leadership in all facets of our business," they are one of a kind. Their strategies are: Continue the focus on growth, establish leadership positions with company owned stores in key markets - US, Japan, Australia, UK; Preemptively enter and aggressively grow in all target markets, leverage the brand into new products categories and channels, continue operation improvements, growth through innovation, develop and maintain leadership talent, maintain our value, culture, and guiding principles. Starbucks guiding principles is to provide a great work environment and treat each other with respect and dignity, embrace diversity as an essential component in the way we do business, apply the highest standards of excellences to the purchasing, roasting, and fresh delivery of our coffee, develop enthusiastically satisfied customers all of the time, contribute positively to our communities and our environment, and recognize that profitability is essential to our future success.

Starbucks has a reputation for new product development and creativity, however, they remain vulnerable to the possibility that their innovation may falter over time. The organization has a strong presence in the United States of America with more than three quarters of their cafйs located in the home market. It is often argued that they need to look for a portfolio of countries, in order to spread business