Starbucks
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September 30, 2006Starbucks, named after the first Mate in Moby Dick, began in the early 1970s in Seattle, Washington (Charles W. L. Hill, 2007). Three visionaries, Jerry Baldwin, Zev Siegl, and Gordon Bowker began selling coffee beans in Pike Place Market and eventually opened five stores and purchased a roasting facility. The three owners of Starbucks met another man, Howard Shultz, who eventually was hired by Starbucks to bring his marketing skills to their organization. While working for Starbucks, Howard Shultz went on a trip to Italy. While in Italy Shultz noticed how coffee and coffee bars were apart of daily Italian life. Shultz realized that the coffee culture Italians experienced could be brought back to the United States and marketed by Starbucks. Shultz brought his idea to the founding owners of Starbucks; however, he was met with resistance. Undaunted, in 1985 Shultz decided to proceed with his vision and opened his first coffee bar I1 Giornale. In 1987, the owners decided to sell Shultz their firm and Starbucks became the name of Shultzs coffee bars.
In the early years, Starbucks failed to turn a profit. Shultz refused to let his dream die and stuck to his conviction not to sacrifice long-term integrity and values, for short-term profit” (Charles W. L. Hill, 2007). By the fifth year Starbucks began to see profits and Shultz took Starbucks public in 1992. Since 1992, Starbucks has grown to over 5,688 outlets in twenty-eight countries and sales have climbed on average of twenty percent per year. Shultz states this growth is attributed to a strict growth policy. All of the Us Starbucks are owned by Starbucks and not franchised out; also Starbucks does not try to capture all potential markets but rather dominate a specific geographic area before it moves on to further expansion (Charles W. L. Hill, 2007). Through the years, Starbucks has developed numerous partnerships, like PepsiCo, American Airlines, and even Barnes and Noble and expanded the Starbucks name from Florida to Japan.
Over the last several years, Starbucks has been expanding its operations internationally. Starbucks started its international subsidiary in 1995. Currently Starbucks has coffee bars in Japan, Taiwan, Switzerland, Greece, Oman, Mexico, and numerous other foreign countries. Even though research indications that only seven percent of Americans has tried its products, Starbucks believes it needs to expand internationally to continue the projected growth rate. Starbucks has changed the way Americans -and people around the world-view and consume coffee, and its success has attracted global attention (Charles W. L. Hill, 2007).
Several key events in Starbucks history has made the company what it is today. First was the hiring of Howard Schultz. Baldwin, Siegl, and Bowker could not have imagined the foresight of Shultz and his vision of Starbucks. Who would have thought that a trip to Italy would be the catalyst that ignited a vision on how Americans and people around the world would view and consume coffee? The second element was Shultz staying faithful to his vision and not letting early failures stop him from reaching his dream. In 1992 Shultz took Starbucks public and through the 1990s Shultz developed several key relationships with other organizations, such as, Canadian bookstore Chapters Inc., Pepsi-Cola, and Kraft Foods Inc. All of these relationships helped Starbuck market its brand worldwide. Starbucks also won accounts with several hotels and airline companies, and even a joint-venture with Magic Johnson, to develop Starbucks coffee bars in underdeveloped areas across the United States. In addition to opening more stores, developing relationships, Starbucks launched a line of packaged and prepared teas (Starbucks IP, L.P., 2007). In 1995 Shultz decided to expand the Starbucks name internationally and proceeded to open its first store in the Taiwan. Since the 1990s, Starbucks has proceeded to expand internationally and continue to enhance its name in the United States. Shultz is a visionary and he has turned his vision into reality with Starbucks.
Even through Starbucks successes, the organization has remained true to its core values.
Starbucks Mission Statement sums up its values. “Establish Starbucks as the premier purveyor of the finest coffee in the world while maintaining our uncompromising principles while we grow” (Whole Foods Market IP, L.P., 2007). Those uncompromising principles include:
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 excellence 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 (Whole Foods Market IP, L.P., 2007).
The Starbucks model is to blanket an area completely. Starbucks does is not concerned if one Starbucks pilfers customers away from another Starbucks, as long as the customers are buying Starbucks products. Starbucks believes, in the long run, that ultimately each of the Starbucks in an area will benefit and sales will increase across the board. Starbucks first step in accomplishing its goals is to find the best coffee beans. Starbucks only uses arabica coffee beans which are acknowledged as the finest beans in the world. Starbucks spends a great deal of time working on relationships with countries from which the company buys coffee beans. In 1992, Starbucks wowed everyone by outbidding European buyers for the exclusive NariÑo Supremo Bean crop (Charles W. L. Hill, 2007). Second is Starbucks vertical integration. Starbucks operate numerous roasting and distribution facilities. To become a Starbucks roaster is considered quite an honor, and Starbucks requires perfection with its roasting procedures. If one coffee bean does not pass Starbucks difficult inspection the whole batch is discarded. Starbucks has also spent a considerable amount of time developing the Starbucks experience. Starbucks locates its stores in high traffic areas and provide a warm and relaxing experience. The Starbucks were I live is located across the street from a major university. Starbucks has offered wireless internet services and added several table and computer hook-ups for students who wish to study while drinking their coffee. The “baristas” are always friendly and offer pleasantries while I am waiting fro my soy latte. The culture Starbucks enforces is another way the organization obtains its goals. Employees are treated with respect and dignity and offers extensive