Starbucks
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Starbucks started as a small business in 1971 when an English teacher Jerry Baldwin, a History teacher Zev Siegel, and writer Gordon Bowker opened Starbucks coffee, teas, and spice in Seattle, Washingtons Pikes Place Market. Buying and changing the name of Il Giornale Coffee Company to Starbucks Corporation in 1987 Howard Schultz began to move Starbucks to a new level positing the company to a dominant retailer, roaster, and brand of specialty drinks. Schultz also added espresso beverages, cold coffee drinks, a line of food items to the menu and sells a line of compact discs, as well as coffee related accessories and equipment in its retail stores. Headquartered in Seattle and operating mainly in the United States, as of 2003 Schultz established over one thousand licensed locations of Starbucks retail stores in Canada, South America, Europe, Asian-Pacific, the Middle East, and Africa.
Starbucks also prides itself on making the company a great place to work. To maintain employee satisfaction Starbucks offers its staff, who are referred to as partners, competitive wages and an attractive benefits package including stock options. Although Starbucks was listed in Fortune Magazine in 1998, 1999, 2000, and 2002 as one of the “100 best companies to work,” and Brandweek ranks Starbucks eighth on its “Super Brand Lists,” and is named one of the “Ten most admired companies in America, Schultz sees many challenges ahead. Therefore, along with top management Schultz is planning his next strategic move for continued success.
In 2004 Starbucks main strategy for continued growth is to expand its foreign market. Top management believes it can grow revenues by 20 percent outside the United States by increasing global opportunities making Starbucks one of the worlds preeminent global brands. In addition, top executives want to test markets where there is no current Starbucks presence. Other key elements of Starbucks strategy is to improve ways to display corporate responsibility, be protective and sensitive to environmental conservation, continue to say “yes” to customer requests, pursue new distribution channels, continue to purchase top-quality coffee beans to meet Starbucks standards, introduce new drink products and strategize to attract customers who dont drink coffee. Top Management will continue to seek ways to measure customer and employee satisfaction. Howard Schultz believes the company has to challenge the status quo, be innovative, and take risks to develop its next successful strategy path.
Overall, based on the five phases of strategic management I give Howard Schultz an A. Schultz has performed an excellent job leading the development of Starbucks strategic vision. However, because Schultz borrowed the idea of the successful espresso bar and the barristers making specialty drinks I was torn between giving him an A/A-. I went with the higher grade because he has the ability to fine-tune the idea to meet the needs of his customers. In addition, Schultz effectively communicated his strategic vision to his staff creating a sense of “buy-in” down the line to lower-level management and employees. Shultz was a visionary for the start forming a strategic path for Starbucks to pursue. In regards to the companys future direction, Schultz was clear on the long-term goals for Starbucks, however, he has the ability to know when to modify products and services and the market position Starbucks should stake out. His vision, for Starbucks to become the most respected brand name, was linked with company values: employee and customer satisfaction, quality coffee, a pleasant environment to build a company that valued and respected people. Shultz continually reinvented the way Starbucks did business as his vision evolved.
Shultz was very realistic in regards to his financial and strategic objects for Starbucks. He envisioned Starbucks to gain financial performance. His objective included expansion into new geographic markets and building organizational infrastructure ahead of profitability, arguing that profits would soon follow. Schultz was right. During 1992-1997 the companys financial performance was strong achieving its objectives of 2,000 stores and further expansion into foreign markets.
Schultz demonstrated the ability to make necessary adjustments to his vision. He continually altered his strategy revising crucial operating functions. Schultz pushed his ideas, on improving implementation, to the Board of Directors as Starbucks and the market changed and as new opportunities existed.
Howard Schultzs original vision for Starbucks included building a chain of Italian-style espresso bars where he would also sell coffee beans and related equipment, and expand the companys location outside the Pacific Northwest, including Chicago. He envisioned, using high-quality dark-roasted beans where customers in pursuit of the perfect cup of coffee could have a positive experience in his stores while he built a company where employees would be proud to work. During the 1990s Schultz revised his vision to include food items to Starbucks menu, which lead to new distribution channels for its products. Schultzs vision also included expanding into foreign markets creating global branding. In 1992 Schultz changed the Starbucks logo from brown to green to symbolize the merging of the Il Giornale and the Starbucks stores creating a new type of store: a retail coffee bean store and an espresso bar/cafй that became Starbucks signature. Schultzs strategic vision changed as Starbucks situation changed and new opportunities were present which indicates that Schultzs present strategic vision is likely to undergo further evolution as the market changes.
Howard Schultz has demonstrated the ability to alter his strategy as his vision evolved. Although Shultzs original ideas for