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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
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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
Starbucks is the world’s largest specialty coffee retailer, Starbucks has more than 16,000 retail outlets in more than 35 countries. Starbucks owns more than 8,500 of its outlets, while licensees and franchisees operate more than 6,500 units worldwide, primarily in shopping centers and airports. The outlets offer coffee drinks and food items such as pastries and confections, as well as roasted beans, coffee accessories, teas and a line of compact discs. The company also owns the Seattle's Best Coffee and Torrefazione Italia coffee brands. In addition, Starbucks markets its coffee through grocery stores and licenses its brand for other food and beverage products. Starbucks Corporation was founded in 1985 and is based in Seattle, Washington. (Bramhall)
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.
Starbucks, a coffee bean sales company did not have much of a marketing plan in place at its inception. Based in Seattle Washington the company began to sell coffee beans to espresso bars and upscale restaurants back in 1982. It took 11 years to progress to that level of production, they originally were a local store vendor at Pike Place Market. The director of marketing brought back the espresso bar idea from his travels in Milan. (Company Profile, 2015) The Pacific Northwest was filled with working class men and women that were drawn to the coffeehouse tradition brought in from Italy.
Schultz, H. (2011). Onward: How Starbucks fought for its life without losing its soul. New York: Rodale.
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...
In 1971, three young entrepreneurs began the Starbucks Corporation in Seattle Washington. Their key goal was to sell whole coffee beans. Soon after, Starbucks began experiencing huge growth, opening five stores all of which had roasting facilities, sold coffee beans and room for local restaurants. In 1987, Howard Schultz bought Starbucks from its original owners for $4 million after expanding Starbucks by opening three coffee bars. These coffee bars were based on an idea that was originally proposed to the owner who recruited him into the corporation as manager of retail and marketing. Overall, Schultz strategy for Starbucks was to grow slow. Starbucks went on to suffer financial losses and overhead operating expenses rose as Starbucks continued its slow expansion process. Despite the initial financial troubles, Starbucks went on to expand to 870 stores by 1996. Sales increased 84%, which brought the corporation out of debt. With the growing success, Starbucks planned to open 2000 stores by year 2000.
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.
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.
Starbucks is an international coffee house and it was created in 1971 when they opened the first store in Seattle, Newcastle. Currently, they own 21,000 stores in 65 different countries of the world, and their passion for the great coffee, excellent service and community interaction exceeds cultures and languages (Starbucks, 2014). This company is the number 1 brand coffeehouse chain in the world due to the best roaster, marketer and seller of speciality coffee. Its main slogan: “Our mission: to inspire and nurture the human spirit – one person, one cup and one neighbourhood at a time” (Jurevicius, 2013).
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
"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.
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,
When I saw this discussion, I couldn’t help but think of Starbucks and the impact they’ve made throughout their 45 years of establishment. I worked with them for about 7 years and saw how unique they were from your everyday coffee and latte spots. A retail company with thousands of coffee shops in the US as well as in other countries, this particular retailer has been able to catch the eyes of all ages as well as locations throughout the world. For example, today college students utilize Starbucks locations to study rather than go to a nearby library. Starbucks is also known for its best coffee and espresso drinks (Latte or Frappuccino) and with one of its delicious espresso 's any student or just a person stopping in to enjoy its lounge area where there is free Wi-Fi is awesome! Starbucks lifecycle has made a 360 turn around and been revamped twice to accommodated the growing market. Customizing their brand to fit more in with everything and not just one thing. By doing this they’ve created multiple product lifecycles within their own lifecycle as a corporate company.