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Strategic management of Starbucks
Strategic management of Starbucks
Starbucks development history
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Starbucks: How It Became an Extension of People’s Front Porch Starbucks, originally started off as a tiny store in Seattle’s Pike Place Market that sold only coffee- and tea-related products in 1971, is now a dynamic company that has achieved omnipresence all over the world. As of March 30, 2014, Starbucks retains its position in being the world’s largest coffee company 1, with a total of 20,519 stores across the globe in 63 countries, from China to Costa Rica to Czech Republic – and counting. In April 2014, Forbes reported that Starbucks recorded a global comparable sales growth of 6% and a revenue of $3.9 billion in Q2 fiscal 2014. In virtually every Starbucks store, you can spot mid-aged women reading a novel, students writing their essays, …show more content…
Howard Schultz, the CEO of Starbucks told Forbes magazine in 2004 that he aimed to portray Starbucks as “an extension of people’s front porch” (Schultz). This review will explore the reason why people would spend hours in a place to do things, be it for leisure of for work, away from home and workplace and still feel connected. In her study, Lawrence (1955) found that customers are not seeking to purchase only the products themselves, but pleasant purchase experiences. Nevertheless, such experiences are rarely found in large multinational corporations such as Mcdonald’s, KFC, Subway restaurant, and Starbucks. So what makes Starbucks stand out amongst them? In his book Pour Your Heart into It: How Starbucks Built a Company One Cup at a Time, Schultz recalled his business trip to Milan in 1983, where he discovered the “coffeehouse culture”. In Italian coffee houses, baristas knew their customers by name, and had casual conversations with them while customers mingled standing on their feet as there were no chairs. This business trip then inspired Schultz to carry out the similar transformation to Starbucks – to make the coffee house a second home to customers. At Starbucks, the working …show more content…
Music is also another aspect that Starbucks emphasizes, since one of the store managers Timothy Jones mixed tapes for his store, which later turned out to be so popular that the company licensed his compilations for sale. (Fortune, 2004). Now, Starbucks takes pride in discovering underground artists and music, and even sells music CDs on their official website. “We’re just as passionate about music as we are about coffee. That’s why we handpick all the tunes you hear in our stores” (www.starbucks.com). The quiet and soothing jazz music played in Starbucks stores remains a spiritual companion and support to women reading their books, and students cramming for midterms at the coffee tables. Starbucks seeks to provide an inviting atmosphere for these individuals to relax despite their demanding schedules. (Seaford; Culp; Brooks, 2012). In many of his speech and interviews, Schultz re-emphasized Starbucks’ endeavour to make the coffee place customers’ “third place” – home, then workplace, and then Starbucks. (Schultz, Fortune,
Starbucks and other companies have found a new way to add economic value, and what they are selling is emotion and a feeling of belonging. Companies have now stopped trying to sell just their products, they are now making you feel good about buying their product. Bill Silver uses the example of the blueberry muffin. If you buy the blueberry muffin, then you get to eat a tasty pastry. But if you don’t buy a muffin, you still feel good about yourself because you resisted urge of buying that blueberry that would have costed you money and make you not as
CEO of Starbucks, Howard Schultz, originally had the idea that Starbucks would have the community/traditional feel in their stores, and still serve high-quality coffee (“Our Heritage” 1). Adding an Italian vibe to the coffee shops, keeping its traditional logo, which is based on a mythical creature, and advertising some of its products in a more “traditional” style accomplished the first goal. For an example, Starbucks recently created a commercial about their Refreshers, which was about cooling someone down in the summer time, with the scenery of Tuscany in the background. Serving high-quality coffee was obtained by ordering coffee beans from where they naturally grow and giving it a perfect roast to give to a customer. It was a marketing strategy that helped Starbucks grow and transform its commodity chain to support gathering more raw materials for a cheaper and more efficient way.
...r getting more than a product. It shows that people want to belong to something. For example, the hippies that go to Ben & Jerrys, or people, who go to Starbucks, are getting more than ice cream and coffee. These people are getting an experience that cannot be matched elsewhere. The question is what sounds better if someone asked you what did you do last night? I got coffee at the local coffee shop or I got coffee at Starbucks. When people think of Starbucks they think of the big comfortable chairs and all the people, some even have a fireplace, and newspapers, and board games. Starbucks has created a culture of sitting and drinking coffee and this has become a big big business. This culture is what has made them as successful as they are today.
Founded in 1971 at Seattle’s Pike Place Market, Starbucks Coffee, Tea and Spices, as it was originally called, has been “brewing-up” its famous blends in over 43 countries, including the United States. Now called Starbucks Coffee Company, business isn’t just about the coffee and tea anymore. Starbucks has its own line of bottled water, handcrafted beverages, fresh food, entertainment, merchandise and a Starbucks Card. The company has received numerous awards for their outstanding business practices. Fortune Magazine has ranked them as one of “The Best 100 Companies to Work For” in 1998, 2000, 2002, and 2008 (Starbucks, 2008). The Starbucks Experience provides consumers and the general public a direct line a of business communication. From friendly baristas to press releases from CEO Howard Schultz, Starbucks keeps its “partners” informed.
Five-star restaurants, private planes, and Lamborghinis are all indisputably indicative of wealth and high class. Of course, consumers who enjoy these items have the financial means to afford it, and being able to show to others that they have the financial means further attributes a status of elitism to affluent individuals. If this is the case, why are the socioeconomically privileged spotted consuming in places that don’t limit entry to the wealthy, like Starbucks? With low prices for quality coffee and a growing reputation as the coffee shop for the average human, Starbucks still entices consumers from backgrounds of high socioeconomic class. Upon examination, flexibility and adaptability is reflected in its responses to consumers' manifold
Starbucks Coffee, Tea, and Spice opened its first store in April 1971 in the Pike Place Market in Seattle, by owners who had a passion for dark-roasted coffee that was popular in Europe, but hard to find in the U.S. (Harrison et al., 2005; Venkatraman & Nelson, 2008). The company’s mission was to provide Seattle with the best access to dark-roasted coffee, and sought to educated customers about the product. As a matter of customer education and acceptance of the product, Starbucks grew and expanded into the successful domestic market it is today. Much of this success can be attributed to a focus on the total customer experience and s...
Schultz, Howard, and Joanne Gordon. Onward: How Starbucks Fought for Its Life Without Losing Its Soul. New York: Rodale, 2011. N. pag. Print.
Starbucks is currently the industry leader in specialty coffee. They purchased more high quality coffee beans than anyone else in the world and keep in good standings with the producers to ensure they get the best beans. Getting the best beans is only the first part, Starbucks also has a “closed loop system” that protects the beans from oxygen immediately after roasting to the time of packaging. They did this through their invention of a one-way valve which let the natural gasses escape but keeping oxygen out. This gave them the unique ability to ensure freshness and extended the shelf life to 26 weeks. Starbucks isn’t only about the coffee, it’s also about a place where people can escape to enjoy music, reflect, read, or just chat. It is a total coffee experience. The retail outlet has been responsible for much of Starbucks growth and has contributed substantially to their brand equity.
The Starbucks Corporation is built around an experience, the Starbucks experience. While the Starbucks experience is most notably associated with the way customers are treated, one could argue however, that the Starbucks experience transcends just the way customers are treated. The Starbucks experience is an all encompassing culture that revolves not just around customers but also to employees, or “partners” and suppliers. Burks (2009) notes that the company cares about the footprint it leaves, no matter where it does business; “the company is dedicated to making positive contributions to the communities where it doe...
Starbucks Corporation engages in the purchase, roasting, and sale of whole bean coffees worldwide. It offers brewed coffees, Italian-style espresso beverages, cold blended beverages, various complementary food items, coffee-related accessories and equipment, a selection of premium teas, and a line of compact discs, through its retail stores.
Starbucks is a worldwide company, known for is delicious brews of coffee and seasonal varieties of tasty drinks for any occasion. Starbucks opened with two main goals, sharing great coffee with friends and to help make the world a little better. It originated in the historic Pike Place Market of Seattle, Washington in 1971 by Jerry Baldwin, Zev Siegl and Gordon Bowker. The creation of Starbucks’ name came from the seafaring tradition of early coffee traders and the romance evoked from Moby Dick. At the time, this individual shop specialized in the towering quality of coffee over competitors and other brewing services enabling its growth to becoming the largest coffee chain in Washington with numerous locations. In the early 1980s, the current CEO Schultz saw an opportunity for growth in the niche market. After a trip to Italy he brought back the idea of a café style environment of leisure and social meetings to the United States we now see in Starbucks locations today. Schultz ultimately left Starbucks to open his own coffee shop, Il Giornale which turned out to be a tremendous success. Fast forward a year later, Schultz got wind that Starbucks was going to sell all their components of Starbucks including their stores and factories, he immediately acquired the funds to buy Starbucks and linked both operations. Within five years he was able to open more than 125 stores starting in New England, Boston, Chicago, and gradually entered California. He wanted Starbucks to be a franchise system based on the mission of telling the truth and emphasize the quality,
Starbucks primary business is that of selling high premium coffee. They have been able to cater a specific product to a specific demographic. Specialization allows for the Starbucks company to deliver great quality and continue to maintain their customer base. Although there is a great amount of coffee flavors the coffee bean is still the constant ingredient in the great tasting coffee.
For this organizational analysis, I decided to analyze Starbucks. I chose Starbucks because they are the leading innovators in socially impactful business activities and personally, I love Starbucks coffee! Obviously, the point of this paper is not to talk about how good their products are, but to analyze how their organization is structured and identify potential for improvement. I have never worked at a Starbucks, but I have two friends that work at the location inside of Hy-Vee in Cedar Falls. After countless hours of research, talking to my friends about day-to-day activities, and actually going to Starbucks on numerous occasions over the past few years, I knew this was the organization that I would love to analyze.
"Rewarding everyday moments". The Starbucks Mantra clearly implies that they are not selling just coffee. They claim to be selling the coffee experience. Their coffee bars that sell specialty coffee also gives customers an ambience where they can be themselves. Starbucks advertises themselves as the third place between home and office, where you can escape, reflect, read, chat or listen. They have become the largest player in the coffee industry and is still looking for avenues to expand themselves.
In addition to being best-known supplier of the finest coffee and promising only the highest quality products, Starbucks emphasizes firm values, provides guidelines to enhance employee self-esteem. This is to ensure continued customer satisfaction. Moreover, diversity has become a priority to providing an inviting environment to all consumers. Starbucks continues to abide by a strict, slow growth policy in which they set out to dominate a market before moving on to expand, thus history has shown this strategy to be successful for Starbucks, making them one the fastest growing companies nationwide.